INDIANAPOLIS – Hoosiers should start smelling asphalt soon under a bill that passed the House and Senate very late Friday night.
The Republican-led legislature voted on a long-term road funding plan, giving $870 million in new money for state roads and $340 million for local infrastructure by 2024.
The money comes from increased gas taxes and fees – and possibly tolling in the future.
“I congratulate state lawmakers … for their plan that will strengthen our global reputation as the “Crossroads of America,” Gov. Eric Holcomb said. “This plan provides the tools necessary to maintain what we have, finish what we started, and invest in the future.”
The plan would start shifting revenue collected in sales tax on gasoline to a special transportation fund in 2020 and finish five years later. But there would be an escape hatch for the governor to object if the funds are unexpectedly needed for health care, schools or child abuse services.
About a third of gasoline sales taxes already pay for roads and the rest funds the overall state budget.
By phasing in the shift the state avoids a hit on the next two-year budget and lawmakers don't need to raise cigarette taxes to fill the gap. It ultimately means an additional $350 million for roads.
Lawmakers have said road needs average between $1 billion and $1.2 billion in new funding over the next 20 years.
The bulk of that will come from a 10-cent increase of the state gas tax, which hasn't been raised since 2003. That tax also will have an annual automatic inflationary-adjustment to the tax.
Revenue from the gas tax increase would be about $155 million starting in 2018 and rise each year after that. A fiscal impact statement from earlier this session said it would hit $355 million in 2021.
There are other annual fee increases – a new $15 vehicle registration fee; a $150 fee for electric cars and a $50 fee for hybrids. The final plan removed an unpopular tire tax.
The bill also gives the executive branch tolling options to explore, and requires a study by INDOT to be presented to legislators next year.
“The funding plan in this bill could be transformational for Hoosier cities and towns of all sizes,” said Matt Greller, CEO of AIM.
“Watching the leadership coming out of the House and Senate on this issue has been inspiring and I believe our state is taking a huge step forward with this comprehensive plan.”
But not everyone was happy.
Americans for Prosperity Indiana expressed disappointment that lawmakers are hiking the gas tax to the fifth-highest rate in the nation.
“We are disappointed that the best agreement legislators could come to is a massive tax hike on Hoosier families,” said AFP-IN State Director Justin Stevens.
“This gas tax hike takes us in the wrong direction and will wipe out the benefits of the largest tax cut in Indiana history.”
The legislation passed the House 69-29 and the Senate 37-12.